London retains top spot for financial services IPOs

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1 London retains top spot for financial services IPOs IPO Eye An overview of the London Stock Exchange listings in Q1 18

2 Market overview The London Stock Exchange (LSE) saw an active start to 18, with 1 IPOs raising 1.3bn in aggregate. The LSE was ranked 1th among the top 1 global exchanges by proceeds, accounting for.7% of global proceeds. LSE accounted for.8% of global IPOs; down from 3.3% in Q1 17. The London Main Market saw 9 IPOs, which raised a combined 1.17bn, while the Alternative Investment Market (AIM) had 7 IPOs, which raised 19mn in total. London s Main Market and AIM combined saw a decline of 38% by deal numbers, while proceeds rose marginally by %. The financial services sector has dominated Q1 18, accounting for 11 of the 1 IPOs and 71% of UK IPO proceeds. This focus confirms that London continues to hold its position as a global financial centre despite political turbulence. Only one of the nine main markets IPOs in Q1 18 was PE-backed. The lull in PE-backed IPOs has also held back the total proceeds raised on UK exchanges. Cross-border IPOs accounted for % of listings in the UK in 17 and 8% of proceeds. The influx of cross-border IPOs is likely to continue in 18, with businesses looking to take advantage of the period of expected calm ahead of Brexit in 19. Main market 9 floats Raised: 1.17bn Largest IPO: Energean Oil & Gas Plc Raised: 33mn AIM 7 floats Raised: 19mn Largest IPO: TruFin plc Raised: 7mn 1

3 IPO markets historical performance IPO main market 7,, Fund raise mn,, 3, No. of IPOs, 1, Q1 Q Q3 Q Q1 Q Q3 Q Q1 Q Q3 Q Q1 Q Q3 Q Q1 Q Q3 Q Q1 Q Q3 Q Q1 18 Fund raise mn No. of IPOs

4 IPO markets historical performance IPO AIM market Fund raise mn 1, 1, 1, No. of IPOs Q1 Q Q3 Q Q1 Q Q3 Q Q1 Q Q3 Q Q1 Q Q3 Q Q1 Q Q3 Q Q1 Q Q3 Q Q1 18 Fund raise mn No. of IPOs 3

5 Market overview Aftermarket performance Newly listed stock in the Main Market delivered returns of 8.% on average above list price as at the quarter end, although two of the nine stocks listed below their expected price. Newly listed stock on AIM delivered returns of.% on average above list price as at the quarter end, although two of the seven stocks listed below their expected price Volatility 99. The FTSE reached record levels during January 18, largely because the low value of the pound made UK investments of particular interest to international investors. However, global market volatility affected the UK, along with all the other major global exchanges in February. The UK equity market has since rebounded strongly, but remains some way off its record levels. In common with other parts of the world, the volatility in global share indices in February has delayed some of this quarter s potential listings until markets have fully stabilised. Global IPO activity Q1 18 global IPO activity was at a comparably high level relative to Q1 17, which was the most active first quarter since 7. The spike in volatility in February slowed IPO activity in many markets. This was caused by a rise in benchmark bond yields due to stronger growth and inflation expectations. Global deal numbers decreased by 7% while proceeds rose by 8%, with 87 IPOs raising US$.8bn, versus Q1 17. Major activity was driven by the APAC, EMEIA and Americas regions in line with previous years trends. IPOs on New York (NYSE), Deutsche Börseand Shanghai stock exchanges dominated in terms of proceeds. (To find out more about the global IPO activity in this quarter visit our Global IPO Trends following the link here) FTSE 1 FTSE FTSE All-Share FTSE AIM All-Share -3-18

6 Market listings New Issues Main market Date of admission Company PE backed Country of incorporation Region/s of domicile Sector Market cap. on admission ( mn) Funds raised ( mn) Placing price (p) Closing price (after first day of trading) Closing price (at QTR end) % change in price 9-Jan-18 AIQ Ltd United Kingdom United Kingdom Nonequity Investment Instruments % 19-Jan-18 Sure Ventures plc United Kingdom United Kingdom Equity Investment Instruments % 13-Feb-18 Marble Point Loan Financing Ltd United Kingdom United Kingdom Equity Investment Instruments % -Mar-18 IntegraFin Holdings Ltd United Kingdom United Kingdom Financial Services % -Mar-18 JPMorgan Multi-Asset Trust plc United Kingdom United Kingdom Equity Investment Instruments % 13-Mar-18 Augmentum Fintech plc United Kingdom United Kingdom Equity Investment Instruments % 1-Mar-18 JTC plc x Jersey Jersey Financial Services % 1-Mar-18 Energean Oil & Gas Plc United Kingdom Greece Oil & Gas Producers % 3-Mar-18 Baillie Gifford US Growth Trust plc United Kingdom United Kingdom Equity Investment Instruments % New Issues AIM Date of admission Company PE backed Country of incorporation Region/s of domicile Sector Market cap. on admission ( mn) Funds raised ( mn) Placing price (p) Closing price (after first day of trading) Closing price (at QTR end) % change in price -Jan-18 Cradle Arc plc United Kingdom United Kingdom Mining % 9-Feb-18 OnTheMarket plc United Kingdom United Kingdom Media % 1-Feb-18 TruFin plc United Kingdom United Kingdom Financial Services % -Mar-18 GRC International Group plc United Kingdom United Kingdom Software & Computer Services % -Mar-18 Stirling Industries plc United Kingdom United Kingdom Nonequity Investment Instruments % 1-Mar-18 VR Education Holdings plc Ireland Ireland Software & Computer Services % 1-Mar-18 Safe Harbour Holdings plc United Kingdom United Kingdom Nonequity Investment Instruments %

7 Looking forward Investors and IPO candidates are concerned about the possibility of continued volatility on global markets and the potential impact on markets from policy shifts in the US. This combined with Brexit uncertainty may hold back IPO activity in Q 18 and for the rest of 18. The UK IPO pipeline is currently still looking strong for small Main Market listings and AIM listings. We expect to see IPO activity to peak in Q3 18 for this group of companies, particularly as some of the delayed listings from Q1 18 come on stream. There are some signs of more listings from larger companies anticipating more significant deal sizes, but this part of the market is very much waiting for a first-mover to lead the way. The low valuation of the pound, along with the continued uncertainty around the UK s exit from the EU will hold back appetite for listing toward the end of the year. As a result, we expect to see a quiet conclusion to 18 as Brexit approaches. Overall, investor confidence remains low, particularly as other opportunities for investment currently stand out above the IPO market in terms of returns. This explains the low level of financial sponsor-backed IPO activity in recent months. IPO pricing remains under pressure in 18 due to the continuing low level of attractive private equity-backed or VC-backed listings. This lull may persist until we see some strong brand names or financial sponsor-backed companies with genuinely compelling equity stories come to the public markets, acting as ice breakers. Financial Conduct Authority (FCA) changes to the rules around UK IPOs will come into effect in July 18, clarifying and enhancing the listing process, particularly for foreign companies seeking to list in the UK. As a result of these rule changes, we expect an uplift in UK IPO activity level in the second half of 18 and beyond. The most significant FCA change relates to the timing of the IPO documentation, which would become effective from 1 July 18. IPOs from the financial sector led the field for UK listings during an active quarter. Although the market may remain low-key overall, we expect to see some of the previously postponed listings to be reactivated in Q 18, especially those with smaller deal size. We also expect an influx of cross-border IPOs from many parts of the world. Scott McCubbin EY UKI IPO Leader

8 Relevant programmes EY Global IPO Centre of Excellence Our Global IPO Centre of Excellence is a virtual hub which provides access to tools and knowledge for every step of the journey from finding out more about what going public means to considering capital raising options and addressing post-ipo risks. It provides access to all our IPO knowledge, tools, thought leadership and contacts from around the world in one easy-to-use source. IPO Retreat 1 May 18 Looking to float in the next 1 3 months? Our IPO Retreat helps CEOs and CFOs contemplating an IPO on one of the London markets. It gives unparalleled advice from key advisors and guest speakers who have been through the process, and provides invaluable networking opportunities. The IPO Retreat offers an invaluable opportunity to find out whether an IPO is the right growth option for your business. To find out more, contact: Eirini Vogiatzi, evogiatzi@uk.ey.com Contacts For more information about the IPO Eye and on any IPO related matter please contact: Scott McCubbin IPO Leader Tel: smccubbin@uk.ey.com Neil Glover Business Development Director, UK London Tel: nglover@uk.ey.com Please visit ey.com/uk/ipo for more information on how we can help you on your IPO journey. 7

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